New Tax Regime / Income of Rs 19.20 lakh will be tax-free in the new regime, this is the calculation

New Tax Regime: The central government has made a major announcement for the middle class in Budget 2025. Under the New Tax Regime, annual income up to ₹12 lakh has been made completely tax-free.
This means if your income is up to ₹12 lakh per year, you won’t have to pay even a single rupee as tax.

Additionally, the government has provided an extra tax deduction of ₹75,000, making a total of ₹12.75 lakh tax-free.

But do you know that with some smart planning, you can actually make your annual income up to ₹19.20 lakh completely tax-free?
Yes, with the right strategy and financial planning, even income above ₹19 lakh can attract zero tax liability. Let’s find out how.

First, Understand the Salary Structure

Suppose your Cost to Company (CTC) is ₹19.20 lakh per year.
The salary structure would look like this:

• Basic Pay: ₹6,00,000

• Personal Allowance: ₹5,50,000

• PF Contribution: ₹21,600

• Gratuity: ₹28,800

• Variable Pay: ₹96,000

• Flexi Pay (Tax-Free Components): ₹6,23,600

Important: You don't receive the full CTC amount in hand, as deductions like PF, gratuity, and others are applied.

Now, How to Achieve Zero Tax?

1. Standard Deduction of ₹75,000

Under the New Tax Regime, the government is offering a standard deduction of ₹75,000.
After applying this, your income will reduce to:

₹19,20,000 - ₹75,000 = ₹18,45,000

2. Take Advantage of NPS (National Pension System)

If you invest in NPS, you get an additional tax benefit of up to 14% of your basic salary.
Here, the basic salary is ₹6 lakh, so 14% of that would be ₹84,000 eligible for deduction.

Reducing your income further:

₹18,45,000 - ₹84,000 = ₹17,61,000

3. Benefit from Flexi Pay Tax-Free Components

Flexi Pay includes components that are entirely tax-free, such as:

• Conveyance Allowance: ₹2,85,600

• Books and Periodicals Allowance: ₹1,08,000

• Entertainment Allowance: ₹2,40,000

• Uniform Allowance: ₹90,000

Adding these up gives you a total tax-free amount of:

₹6,23,600

Subtracting this from your reduced income:

₹17,61,000 - ₹6,23,600 = ₹11,37,400

4. Final Step: Taxable Income Below ₹12 Lakh

Since the 2025 Budget provides zero tax for income up to ₹12 lakh under the New Tax Regime, your tax liability will now become zero.

A Simple Breakdown:

And since there’s no tax on income up to ₹12 lakh, you end up paying zero tax — even with a CTC of ₹19.20 lakh!